Abbey

Chartered Tax Advisers
Old Bishops' College
Churchgate
Cheshunt
Hertfordshire
EN8 9XP

T: 01992 642024

E: abbey@abbeyaccountants.com

Smiling businessmen and women

  TAX E-NEWS - July 2016


Welcome to the July monthly tax newsletter.  These newsletters are designed to keep you informed of the latest tax issues.

Please contact us if you need further information on any of the topics covered.

Peter McDaid CTA ATT TEP
Director


BREXIT

Like it or loathe it on 23th June 2016 the UK voted to leave the EU. It appears that the UK government does not intend to invoke article 50 until the earliest at the end of the year which means that Brexit is unlikely to happen before December 2018 if not later.

If we ignore the hysteria in the media and from some quarters, the immediate impact has been increased volatility in the currency markets and stock markets. The stock market has bounced back but sterling has not yet fully recovered. We will be in for a choppy ride for the foreseeable future but I would stress that in reality nothing has yet changed.

What will happen is that businesses and consumers will take a wait and see approach to investments and major purchases. This must in the short term slow down the economy but by how much is anyone’s guess.

In the next few years it will become clear what terms the UK can agree with the EU and whether it will become more difficult and costly for us to trade with the EU.

We export £220 billion to Europe and they export £290 billion to us. Because of the Port of Rotterdam, the figure for our exports to Europe could well be inflated as some of the exports to the rest of the world go through Rotterdam as it is a major shipping hub.

In any event the rest of Europe sells more to us than we sell to it and it is therefore in both the UK’s and the EU’s interest to reach a reasonable agreement which allows the trade to continue at the current level.

The rest of the world in particular the countries in the Commonwealth but also China appear to be queuing up to have trade agreements with us. As a result, trade with these countries will eventually increase dramatically. So in the long term it may well be beneficial to be outside the EU but only time will tell.

In the short term the advice to our clients is that it is business as usual. Perhaps when considering considerable expenditure on the acquisition of equipment or expansion of the business it would be prudent to hold fire for the time being and talk to us.

UK Businesses that trade with the EU and internationally should use the two-year window to devise contingency strategies and to plan ahead of the exit based on the emerging shape of the UK’s subsequent relationship with the EU.

Corporation tax rate of 15%
George Osbourne before he was sent on his merry way stated that as a result of Brexit he planned to reduce the rate of corporation tax to 15%. The new Chancellor Philip Hammond has not commented on this, he has ruled out an emergency budget and stated that the Autumn Statement will be made at the normal time.

Register for persons with significant control (PSC)
From the 06 April 2016 UK companies and Limited Liability Partnerships are required to set up and retain a register of people who have significant control over a company.

For these purposes controlling interest is defined as an individual who has directly or indirectly more than 25% of the shares or the voting rights in the company

In addition, if an individual directly or indirectly has the right to appoint or remove a majority of directors or has the right to exercise significant influence or control over the company he or she is deemed to be a person of significant control (PSC)

Unfortunately, yet another layer of red tape has been imposed on businesses!!


Companies House returns replaced with confirmation statements
From the 30 June 2016 the annual return has been replaced by the annual confirmation statement. This new statement requires the reporting of a lot more detailed information on the company and its directors. In addition, it requires the reporting of the information on the PSC register (mentioned on the previous page).

In theory you can file a paper form (CS01) which consists of 28 pages and the filing fee is £40. In practice everyone will file online which has a filing fee of only £13. Once the first online confirmation statement has been completed, filing in subsequent years should be easier as the statement will contain pre populated data and in-built checks.

The VAT FLAT RATE SCHEME for a small business?
The VAT Flat Rate Scheme is intended to simplify VAT accounting and reporting for small businesses, and some may even find that they pay less VAT than using normal VAT accounting.

To join the scheme your VAT turnover must be £150,000 or less (excluding VAT), and you must apply to HMRC to use the scheme. You can remain in the scheme until your turnover including VAT exceeds £230,000. With the Flat Rate Scheme, you pay a fixed rate of VAT to HMRC depending on your business category and you keep the difference between what you charge your customers and pay to HMRC. However, you can’t reclaim the VAT on your purchases, except for certain capital assets over £2,000.

HMRC have recently revised their guidance on different business categories. For example, not all consultants should use the 14% flat rate applicable to management consultants and should instead use the 12% rate for ‘business services not listed elsewhere’. That would result in them paying over 2% less of their takings to HMRC. On £150,000 a year that would be a £3,000 VAT saving. There is a further 1% reduction in the first year that the business is VAT registered.

Company Car advisory Fuel Rates
These rates are the suggested reimbursement rates for employees’ private mileage in their company cars and are reviewed each quarter on 1 March, 1 June, 1 September and 1 December. In line with an increase in fuel prices, the rates that apply from 1 June 2016 are shown below:

engine size

petrol

diesel

LPG

1,400 cc or less

10p

 

7p

1,600 cc or less

 

9p (8p)

 

1,401cc to 2,000cc

13p (12p)

 

9p (8p)

1,601cc to 2,000cc

 

10p

 

over 2,000cc

20p (19p)

12p (11p)

13p











Where there has been a change, the rates that applied prior to 1 June 2016 are shown in brackets.

If you reimburse your employees the tax free amount of 45p a mile (25p after 10,000 miles) for using their own car for business purposes, then 20/120ths of the above amounts can be reclaimed as input VAT by your business. For example, a diesel-engine car emitting over 2,000cc = 12p x 1/6 = 2p input VAT a mile.

TAX DATES AND PAYMENTS

Date What's Due
19 June

PAYE & NIC deductions, and CIS return and tax, for month to 5/6/16 (due 22 June if you pay electronically)

1 July Corporation tax for year to 31/09/15
6 July Forms P11D and P11D(b) for 2015/2016 tax year, and where appropriate form P9D.
19 July PAYE & NIC deductions, and CIS return and tax for month to 05/07/2016 (due 22 July if you pay electronically); payment of Class 1A NICs for 2015/2016 (22nd July if you pay electronically).

If you have any questions about this newsletter please contact us, we will be happy to help.